Bharti Airtel share surges 2% on plans to raise Rs 21,000 crore through rights issue

The Bharti Airtel stock was trading near 1 percent higher at rupees 599.90 on the BSE Sensex on Monday

Bharti Airtel shares surges nearly 2 percent in early trade, a day after India’s second-largest telcom company announced plans to raise upto rupees 21,000 shares by selling shares to existing investors in a rights issue.

 

This plan comes amidst the efforts to build a war chest to clear its statutory dues, enlarge and deepen its 4G network and prepare for the auction of 5G airwaves and launch the next generation technology in India.

 

The Bharti Airtel stock was trading near 1 percent higher at rupees 599.90 on the BSE Sensex on Monday.

 

The Sunil Mittal-led telcom had said in a note to stock exchanges on Sunday that under the rights offer, Bharti Airtel shareholders will receive one new share for every 14 held at rupees 535 each.

 

Edelweiss Research said, “Reliance Jio’s stronger balance sheet, impending 5G spectrum auction and related capex may have prompted Bharti to raise funds, and we see it positively."

 

Edelweiss added that at this time period the fund raise was not necessary at this juncture, it does provide Bharti Airtel with the necessary ammunition in case of aggressive 5G launch.

 

The brokerage added that the Bharti Airtel rights issue is at a 9 percent discount to its CMP (closing market price) and will lead to 7 percent equity dilution.

 

Bharti Airtel had said in a regulatory filing on Sunday that its board had “comprehensively reviewed the industry scenario, business environment, financial or business strategy of the company and approved the company’s plan to raise further capital."

 

The promoter group led by the Mittal family and Singapore’s SingTel that owns nearly 56 percent of the telcom. The Mittal family directly and indirectly owns 24.13 percent, at the same time SingTel holds 31.72 percent and the rest is held by the public.

India Scanner News Network

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